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Why Walmart Family Mobile may be worth a look

Consumer Reports News: September 16, 2010 03:53 PM

Earlier this week, Walmart announced it's jumping into the wireless business with Walmart Family Mobile, a no-contract cell phone service that's set to debut on September 20.

Here's how the service might save you money, and why it may be a significant presence in the wireless marketplace:

Talk-and-text rates are low. The Walmart service offers unlimited talk and text for $45 a month for the first line, $25 per month for each additional line, with a limit of five lines per account.

That isn't the lowest price national service; Prepaid Straight Talk, a brand of Tracphone, charges $45 a month for unlimited voice, text and web access, which is a major bargain, in large part due to the unlimited data component. (See our Ratings of prepaid phone carriers, available to subscribers.)

But the Walmart plan is likely to put pressure on the entire industry in two key ways. It may help push down prices for unlimited voice service and encourage the folding in of generally-overpriced text messaging services into the monthly plan cost.

The phone selection is promising. So far, it's pretty sparse, just five phones. But where models with prepaid plans are often Spartan, Walmart's includes the likes of the Motorola CLIQ XT, a smart phone that runs on the Android operating system, has a QWERTY keyboard, and sports a touch screen.

True, you must pay $249 for the Cliq with the Walmart service, where it's currently "free" from T-Mobile's website with a two-year contract. (By the way, phones from the Walmart service run on the T-Mobile wireless network.)

But you'd quite likely repay the cost of that "free" Cliq in higher monthly fees for the cellular service, because you actually pay back "free" and discount phone subsidies over the life of a contract—and beyond. With two Cliqs on a two-line unlimited talk and text plan, for example, I calculate you'd pay some $1,176 more in fees to T-Mobile for the cell service over two years compared with Walmart. Even after subtracting the $498 cost of the two phones paid to Walmart Family Mobile, you'd still be ahead with Sam Walton by almost $680—a savings of more than $28 a month.

Unused data rolls over. You get 100 MB of data free for each line at activation, after which you buy a prepaid 200 MB WebPak refill for $10, 500 MB for $25, and 1 GB for $40. That 200 MB exceeds the average smart phone data use of about 150 MB per month, and it's $5 cheaper than the 200 MB bundle with AT&T's data plans. AT&T is cheaper beyond that, however, at $25 per 2 GB vs. Walmart's $40 per 1GB.

However, two additional features of Walmart's data plans may mean they aren't pricier for heavy data users. First, where AT&T requires a data plan for each smart phone, Walmart lets you share data among all your phones on a family plan. And where with AT&T you lose unused data at the end of the month in which you buy it, the Walmart bundles never expire.

It's "post-paid" service. Walmart service is contract-less and "post-paid," which means you pay your bill at the end of each month, just as you do with an AT&T, Sprint, U.S. Cellular, T-Mobile, or Verizon contract account. Since it's not prepaid, Walmart's plan can't be tainted with the outdated but lingering stigma that prepaid has as a refuge for people with poor credit scores and limited means.

Bottom line: Walmart Family Mobile is worth a look if a phone from its slim selection meets your needs. That's especially true if you're a light user of data services who's now paying for a monthly unlimited data plan or an AT&T bundle that you often don't use up by the end of the month.

I wouldn't be surprised to see the big contract carriers respond to the Walmart plans with more consumer-friendly pricing and policies—a much-needed recessionary cost-cutter for everyone.